Gadhafi funding claim weighs on French campaign

French President Nicolas Sarkozy on Sunday fiercely denied that he was offered campaign funding from late Libyan leader Moammar Gadhafi, as new challenges piled up against him a week ahead of the country's presidential runoff.

Sarkozy also rebuffed leftist critics who compared his campaign rhetoric to that of France's Nazi collaborators, reviving ugly wartime memories in what has been a particularly bitter presidential race.

Polls predict Sarkozy will lose the May 6 runoff to Socialist Francois Hollande, who promises government-funded jobs programs and higher taxes on the rich _ pledges that resonate with a recession-weary electorate.

Both men staged rousing rallies Sunday on opposite ends of the country, with Hollande sounding victorious already and Sarkozy calling for Europe to protect its civilization.

The campaign funding allegation originates from a year-old claim by Gadhafi's second son, Seif al-Islam Gadhafi, that Libya financed Sarkozy's 2007 presidential bid. The allegation came as Sarkozy was campaigning for international airstrikes against Gadhafi's forces to stop his crackdown on Libyan rebels.

Although no evidence has emerged that the funding ever took place, French website Mediapart reported Saturday that it had obtained a 2006 Libyan document signed by Gadhafi's then-intelligence chief Moussa Koussa with an offer by the regime to spend (EURO)50 million ($66 million) on Sarkozy's campaign.

"It's a setup, it's a slanderous remark," Sarkozy said on Canal Plus television Sunday, accusing Mediapart of being a mouthpiece of the left.

Hollande's campaign team urged judicial authorities to investigate, as did Segolene Royal, the runner-up in the 2007 race.

Supporters of the Socialist leader gathered Sunday for a rally in Paris where Hollande said his presidency would be a "refusal of austerity."

He wants to renegotiate a hard-fought European treaty on budget tightening, saying economies need more government stimulus. Critics say his plans will dig France deeper into unsustainable debt.

"We have to change the orientation of Europe. Things are starting to move," Hollande said.

Earlier in the day, Hollande honored Jews deported during World War II, visiting a memorial and museum to the Holocaust in Paris and praising the museum's work as crucial "for Jews and for humanity."

Some 76,000 Jews, but also thousands of gypsies and others, were deported from Nazi-occupied France to concentration camps during World War II, and the overwhelming majority never returned. Since the 1950s, the last Sunday of April has been a special day when France honors those deported.

Sarkozy paid tribute to French Jews during a rally in the southern city of Toulouse, where a gunman killed three Jewish schoolchildren and a rabbi last month in a rampage that horrified the country.

"You saw what monstrosity the hate of the other can bring," he said. "When a Jewish child feels threatened, it's not the Jewish community's problem. It's the national community's problem."

Sarkozy has come under criticism during the presidential campaign for his tough language toward immigrants _ language that some have compared to that of France's Nazi collaborators. Sarkozy called the comparisons "so insulting and excessive that they demean those who pronounce them," in an interview with the daily Le Parisien.

At his rally Sunday, he kept up his calls for Europe to "protect European people and European civilization." He insisted that racism shouldn't be lumped together with "those who love France and who want to keep it the way they received it from their parents."

Sarkozy supporter Roseline Ailloud praised his handling of economic crises and said France shouldn't be so generous with welfare benefits to immigrants. "We cannot take in all the misery of the world," she said in Toulouse.

Sarkozy has stepped up his rhetoric since anti-immigrant far right leader Marine Le Pen scored a strong third-place showing in the first round of the presidential election April 22.

Le Pen's voters could be crucial to deciding who wins the runoff. Her father and the founder of her National Front party, Jean-Marie Le Pen, has been convicted of racism and anti-Semitism. Marine Le Pen has focused her ire on what she calls the "Islamization" of France.

Sarkozy also dismissed suggestions that his conservative party UMP helped discredit former International Monetary Fund chief Dominique Strauss-Kahn.

Strauss-Kahn was considered the leading presidential hopeful a year ago but was then arrested and charged with assaulting a New York hotel maid. The charges were later dropped. A report in the London-based Guardian newspaper says Strauss-Kahn believes his political opponents sabotaged him.

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Cecile Brisson and Sylvie Corbet in Paris and Johanna Decorse in Toulouse contributed to this report.